Texaco Inc. Friday rejected Carl Icahn's $12.39 billion takeover bid, labeling the proposal a "non-offer," as Icahn began a proxy fight to have himself and four associates elected to Texaco's board.

"Icahn's offer appears to be merely another tactic to pressure the company to accede to Icahn's demands that the board has already concluded would not be in the best interest of shareholders," the company said.Texaco said the board rejected the offer because it has made "substantial progress" on its $5.6 billion restructuring, which "the board is confident will result in a substantial enhancement of both near- and long-term value for all shareholders."

The statement charged the "illusory" nature of Icahn's bid was demonstrated by the investor's failure to show how he would finance the bid, which Texaco contends would cost a total of $20 billion.